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How to predict Facebook's future

March 4 · Issue #296 · View online
The Interface
Welcome new readers! Here’s a more normal version of The Interface, with some links related to my big piece below. As always, let me know what you think by replying to this email.
Criticism of Facebook comes from all quarters, and at this point it’s rare to discover an opinion about the company that has never previously been voiced. My favorite takes these days tend to come from people who once worked at the company — recent experiences on the ground can lead to more original thinking.
Eugene Wei, who served as head of video at Facebook’s Oculus division from 2015 to 2017, is one of the most original thinkers on social networks. In a spectacular new blog post, he offers us several useful ways to describe how a company like Facebook functions in its users’ everyday lives — and in so doing, helps us to predict the future.
Wei’s full post approaches 20,000 words, and is worth reading in full. I want to draw out a few key elements to consider today.
First, Wei gives us a new way of thinking about social apps like Facebook, Instagram, and TikTok. Their original value lay not in their utility, he writes, but in their ability to increase the social status of their users. One reason young people gravitate toward these apps is because they can rapidly generate social capital for people who don’t have any — and one reason older people shun them is that they already have all the social capital they need.
Collectively, then, these are what Wei cheekily calls “status-as-a-service” businesses. They don’t give away status: to the contrary, they require the user to perform some creative task that others find difficult. But if they present the right task — what Wei, borrowing from the language of cryptocurrencies, calls the “proof of work” — they can unlock an impressive store of value.
Thus, one way to think about the health of a social network is how effectively it helps its users generate status. Perform this calculation and you understand why something like TikTok or musically feels hot right now, and Facebook seems cold:
Status isn’t worth much if there’s no skill and effort required to mine it. It’s not that a social network that makes it easy for lots of users to perform well can’t be a useful one, but competition for relative status still motivates humans. Recall our first tenet: humans are status-seeking monkeys. Status is a relative ladder. By definition, if everyone can achieve a certain type of status, it’s no status at all, it’s a participation trophy. created a hurdle for gaining followers and status that wasn’t easily cleared by many people. However, for some, especially teens, and especially girls, it was a status game at which they were particularly suited to win. And so they flocked there, because, according to my second tenet, people look for the most efficient ways to accumulate the most social capital.
So what does a cold social network do? Well, it might do any number of the things we’ve seen Facebook do over the past several years. It would invest more in Instagram, which still reliably generates social capital for its users. It would invest more in utilities like Messenger or payments, which are less beloved but bring users back day after day no matter how cool the network seems. And it would add various entertainment products, in the hopes that they would become similarly sticky.
That will all probably work well enough, for a time. But Wei makes a convincing case that the next generation of social networks will intuit various lessons about social capital from the generation of services that included Facebook, YouTube, and Twitter — and build quite different products as a result. It remains unclear whether Facebook will simply absorb these ideas, as it did with Snapchat stories, or whether a stiffer challenge could emerge.
It’s possible that one already has. In Wei’s view, TikTok marks an important break with social networking’s past. And it has to do with how social capital is accumulated. In the previous era, most of the spoils went to the platform’s earliest adopters — as with Bitcoin, mining value gets harder as the platform ages. TikTok, on the other hand, is set up to promote videos regardless of who made them or how many followers they might have:
If you are new to TikTok and have just uploaded a great video, the selection algorithm promises to distribute your post much more quickly than if you were on sharing it on a network that relies on the size of your following, which most people have to build up over a long period of time. Conversely, if you come up with one great video but the rest of your work is mediocre, you can’t count on continued distribution on TikTok since your followers live mostly in a feed driven by the TikTok algorithm, not their follow graph.
The result is a feedback loop that is much more tightly wound that that of other social networks, both in the positive and negative direction. Theoretically, if the algorithm is accurate, the content in your feed should correlate most closely to quality of the work and its alignment with your personal interests rather than the drawing from the work of accounts you follow. At a time when Bytedance is spending tens (hundreds?) of millions of marketing dollars in a bid to acquire users in international markets, the rapid ROI on new creators’ work is a helpful quality in ensuring they stick around.
Wei closes by suggesting that acknowledging that social networks are status businesses may even help them mitigate (or at least better focus on) some of their externalities, including the fact that many of the people seeking status there are extremely bad actors. At the very least, it could give social networks something positive to rally around, beyond the usual sloganeering around connecting the world. One reason I find myself rooting so hard for a company like Patreon is that it exists primarily to turn users’ social capital into money. It’s an idea YouTube could have had first, and didn’t. (And it’s an idea that Facebook had over the weekend, but worse.)
In the meantime, I suspect the ideas in this post will help inspire the next generation of founders working on social apps, or at the very least serve as a reference point for them as they build. It’s easy to look at Facebook’s scale and assume the social game has already been won, forever. But Wei notes that Facebook board member Marc Andreessen, in Elad Gil’s new book, has a word of caution there:
The problem with network effects is they unwind just as fast. And so they’re great while they last, but when they reverse, they reverse viciously. Go ask the MySpace guys how their network effect is going.

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